Alito on Business and Contracts

Today's  WSJ features an illuminating article titled, “Nominee's Record Shows Backing Of Business Interests, Contracts.”

I will excerpt a portion of the article:

For those assessing Judge Alito, there are dozens of business cases to sift, some of which are widely known and many which are more technical. One of the best-known is a 1997 dissent in which Judge Alito argued against a racial-discrimination claim made by a black housekeeping manager who was denied promotion to a job at a Marriott International Inc. hotel. The position, at a hotel in Park Ridge, N.J., went to a white woman. While the court ruled the woman could take the case to a jury, Judge Alito argued that, although she might be able to claim she had been treated unfairly, that wasn't enough to let her sue.

"What we end up doing then is...allowing disgruntled employees to impose the cost of trial on employers who, although they have not acted with the intent to discriminate, may have treated their employees unfairly," he wrote. "This represents an unwarranted extension of the anti-discrimination laws."

. . . .

Judge Alito has insisted on enforcement of contract terms challenged as unfair or otherwise as void, such as provisions that require consumers to use arbitration rather than lawsuits to pursue complaints, said Larry E. Ribstein, a law professor at the University of Illinois.

. . . .

A case just last month reflects his approach. In that ruling, Judge Alito went against Royal Indemnity Co., an insurer that had refused to pay a claim to a student-loan provider because, it said, the beneficiary had obtained its protection through a "spectacular fraud."

Judge Alito pointed to a policy term giving the beneficiary an "absolute" right to collect regardless of "any fraud with respect to the student loans." He dismissed Royal's argument that the terms covered only "microfraud of individual schools or students, not the macrofraud" of the lender, Student Finance Corp.

"The scope of Royal's obligations turns not on a boilerplate...clause but on waivers sculpted by parties of exquisite legal and financial sophistication," the judge wrote. In such cases, he reasoned, courts shouldn't protect parties who made a bad contract.